Every year brings new variations in Medicare Part D premiums. If you are a beneficiary, you need to keep track of the changes so that you can choose the most cost effective plan. So, what does 2013 have in store?
A slight increase expected in Medicare Part D premiums in 2013
From January 2013, Medicare part D premiums are expected to increase by a slight margin. In fact, Medicare part D premiums have been on a steady annual rise ever since the drug plan was initiated in 2006.When compared to the initial days, premiums have increased by as much as 46 percent. In 2006, The average weighted part D premium was $25.93. In 2012, the average premium increased to $37.78.
In 2013, the average might touch or breach $40 depending on the place, income, plan type and provider. Analysts expect an increase of 6 percent this year. However, premiums in some states might see double digit increments. Additionally, at least seven drug plans out of the top ten might levy an increase ranging between 11 percent and 23 percent.
What causes variations in Medicare part D premiums?
Certain aspects bring variations in the premiums you pay for Part D.
Place of residence: Consider this example for the year 2012. For the same basic plan, part D beneficiaries living in Idaho paid a premium of $39.09 while those in New Mexico paid only $23.76.
Type of plan: Walmart’s Preferred Rx Plan offered by Humana has increased premiums by 23 percent in 2013, taking the amount to $18.50. The AARP Medicare Rx Preferred Plan offered by UnitedHealthCare hass increased by only 1 percent, taking the amount to a much higher $40.42.
In order to reduce costs, choose your drug list carefully. The best option is to opt for generic drugs. Do not opt for cheap drugs to be included in the plan. Pay for them out of your pocket whenever needed so that your premiums remain low.
Provider: The major difference in premiums arises depending on the provider you choose. Since premium rates are decided by private providers. Costs vary based on the local expenses that the provider incurs. For instance, a place where insurance providers pay lower taxes charge lesser premiums.
Income: The income of beneficiaries is another important factor that influences Medicare part D premiums. Higher income groups have to pay higher premiums. According to standard regulations, individuals who earn in excess of $85,000 and couples who earn over $170,000 pay an additional amount called the “high income surcharge”. These surcharges range between $11.60 and $66.40. The surcharge is lowest for people in the income group $85,000 and $107,000 and these costs are highest for the people who earn over $214,000 annually.
In order to set premiums based on income, your adjusted gross income from the last two years is considered. This is the last updated data that IRS provides Social Security. If this amount is greater than a particular limit, you need to pay a certain amount of extra premiums. This extra amount might be deducted from different benefits including Social Security, Office of Personnel Management or Railroad Security Board.
If you are charged a certain amount of extra premiums for Medicare Part D, you can contact the Social Security office for clarifications.
Before purchasing a Part D policy, consider different providers, and choose one based on costs and coverage.